French Senate Approves Proposals for Shared Liquidity

By: David/May 5, 2016

The French Senate has approved an amendment to the Digital Bill that will allow regulators to form online poker compacts with other EU regulated states.

The approval of the shared liquidity amendment was one of three proposals sponsored by the French online gambling regulator ARJEL that were accepted by the Senate earlier this week – the other two relating to gambling addiction and the mediation of disputes.

Naturally the prospect of online poker compacts with other EU regulated states was the amendment that gained the most interest, as it signifies an apparent U-turn on government policy – ministers having overwhelmingly rejected a similar proposal in January.

However, there is still a long legislative process to be completed before shared liquidity with Italy, Spain or Portugal is to become a reality; and many industry observers believe that the amendment to the Digital Bill is too little and too late to save the French online poker market.

Even if the amendment is fast-tracked through the legislative process, there are concerns that shared liquidity alone is not enough to reverse the ailing fortunes of the French online poker market. Furthermore, an “equivalent regulation requirement” may prevent any compacts from being formed at all – due to the unique way in which cash game hands of poker in France are taxed.

The State of Online Poker in France

Since online poker in France was ring-fenced in 2011, the market has been in serious decline. Year-on-year revenues have consistently fallen due to high taxation and limited liquidity, and half of the online poker sites that applied for licences five years ago have packed up and left – with EverestPoker.fr due to join the exodus at the end of the month.

Of the sites that remain, only Winamax and PokerStars make a profit from online poker – the remainder relying on bingo, sports betting and online casinos to make their presence viable – while many high-volume players have either moved to countries with lower taxation and higher liquidity, or taken their action offshore due to the attraction of lower rake and higher player rewards.

Research conducted by France’s Observatory of Games (ODJ) and the Monitoring Centre for Drugs and Drug Addiction (ODFT) in 2014 concluded that nearly half of French poker players played at offshore poker. Since 2014, a further decline in cash game action on domestic sites would imply that more French players are choosing to take their online action offshore rather than play on France´s regulated sites.

Will Shared Liquidity Have any Effect?

The news of the proposal´s approval was initially received well by French poker players. However their enthusiasm was soon tempered when it became apparent the legislative process of forming compacts with other EU regulated states may take years to complete – the amendment having to be agreed by the House of Deputies and examined by a joint committee before being presented to the National Assembly for a common version to be approved.

Several contributors to the French poker site clubpoker.net also raised concerns that the countries France was likely to form compacts with were experiencing the same issues of more experienced players avoiding each other and preying on a limited number of novice players. The likelihood is – according to the contributors – that the proportion of experienced to novice players will remain the same and the issue of limited liquidity will not be resolved at all.

The players suggest that the only way in which shared liquidity will work is if France is allowed to join rest of the world player pools. Unfortunately that is not going to happen. In the release from the French Law Commission, the approved amendment clearly states that the regulator will only be allowed to enter into compacts with countries that have regulations equivalent to those implemented in France. This creates a massive technical problem in relation to taxation.

In cash games in France, taxes are deducted from bets made in every round of betting (pre-flop, post-flop. post-turn and post-river). Every other regulated country in the EU uses the more familiar method of deducting a rake from the pot and then taxing the operator on Gross Gaming Revenues. The equivalent regulation requirement is likely to delay the implementation of shared liquidity – if it ever happens at all.

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